EMPLOYMENT APPEALS TRIBUNAL
CLAIM(S) OF: CASE NO.
Michael Glennon UD80/2014
UNFAIR DISMISSALS ACTS, 1977 TO 2007
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms. V. Gates BL
Members: Mr. D. Peakin
Mr. D. Thomas
heard this case in Dublin on 2 February 2015, 30-31 March 2015, 19 May 2015, 29 May 2015 and 21 July 2015
Mr. Peter Leonard BL instructed by
Mr. Fintan Lawlor, Lawlor Partners, Solicitors,
4/5 Arran Square, Arran Quay, Dublin 7
Ms. Lorna Lynch BL instructed by
Ms. Lynne Martin, AIB Plc,
Block J0, Bankcentre, Ballsbridge, Dublin 4
The determination of the Tribunal was as follows:-
It was agreed between the parties’ representatives that the claims of MG and DC for unfair dismissal would be heard together and that the second Claimant (DC) should not be present for the cross-examination of the first Claimant (MG). It was not disputed that the remuneration received by each Claimant was in the sum of €1,250 gross a week exclusive of VAT.
In dispute was whether the Claimants worked pursuant to a Contract of or a Contract for Services. The Claimants claimed to be employees of the Respondent and the Respondent disputed this claim relying on a “Consulting Agreement” dated 8th April 2010, which said Agreement contained, inter alia, a provision that “nothing in this Agreement shall be construed or have effect as constituting any relationship of employees and employer between the Client and the Consultant”. MG gave evidence that he had started in the financial industry in 1967 working initially for IP before moving to BRC and following the closure of BRC in 1986 he became a freelance consultant. As a financial consultant MG worked for financial institutions and firms of Solicitors and was paid per case rather than receiving a fixed salary. He was self-employed. His work involved visiting customers in their homes, making a financial assessment and reporting back to the Client with recommendations.
In late 2008 MG and DC were approached by a representative of the Respondent enquiring whether they would be willing to undertake similar work for the Respondent. MG said that he worked solely for the Respondent, that the Respondent told him which customers to visit, that he worked five days a week and could not sub-contract. MG said that he called to his “Line Manager” each Monday morning at which meeting they would discuss the week’s workload which would amount to approximately twenty five cases a week. MG would then make a journey plan based on maximum travel efficiency, travel involved approximately five hundred miles a week and the Claimant would write reports containing recommendations at the weekend.
The fixed remuneration was €1,250 a week with travel expenses paid by the company. He said that €37,500 was the threshold for VAT registration and that he and DC were registered for VAT and paid VAT in respect of their income. MG submitted invoices and was given a staff number and a staff identity badge. MG said that he was not entitled to sub-contract any of the work and saw himself as an employee. Although it was agreed that MG and DC would make a minimum of sixteen calls a week, they would in fact, make over twenty calls each week.
MG was invited to staff meetings and Christmas parties and attended training courses. MG said that he was told that he was an integral part of the process. Both Claimants started work in September 2008 but it was not until January 2009 that a formal Contract was signed and a second Contract was signed in April 2010. No further Contract was presented thereafter.
During the sixth year of his work with the Respondent, the company took on five further field representatives. MG and DC were asked to help by contributing to their training. On 11th September 2013 MG received a letter of termination giving thirty days notice of the Respondent’s intention to cease sending him visit requests by 11th October 2013. This letter had been preceded by a telephone call from AC asking MG to meet for a discussion in relation to his Contract. MG was informed that his services were no longer required and said that he felt very shocked as he wasn’t anticipating such a decision. MG accepted that there had been a number of quiet weeks prior to the meeting but felt that the arrears situation remained in a poor state.
MG showed a staff identity card to the Tribunal and emphasised that he could not profit from the number of calls made for the Respondent and that “cold calls” could only be made during the hours of 9 am to 9 pm. MG confirmed that he was born in 1948 and became entitled to an Old Age Pension at age 66 and that he had no private pension. He said that following termination he visited all his previous business contacts in the larger financial institutions and smaller firms seeking employment but was unsuccessful. He also made some written applications between November 2013 and February 2014.
On behalf of the Claimants, RMcG gave evidence that he was a Chartered Accountant who had undertaken an income and expenditure account for MG and DC. He prepared their annual tax returns which comprised income and mileage and accommodation expenses refunded to them on the presentation of an invoice. Expenses were not significant. On reaching the 37,500 threshold the Claimants were registered for VAT. RMcG advised the Claimants to deregister for VAT during the period when their income dropped although they subsequently re-registered.
DC gave evidence that he had been employed by a large Building Society since 1966 and had worked at Head Office and subsequently been promoted to Branch Manager and Area Manager. In 2000 he accepted an Early Retirement Package. He confirmed that together with MG, he had been approached by the Respondent and offered a contract to deal with customer arrears. DC said that the Claimants attended at the Respondent’s premises on Monday mornings when a “Line Manager” distributed the files to be worked on for the week. He said that when the Claimants approached the allocated customer they said that they were attending on behalf of the Respondent. DC said that in his opinion the customers believed that he was an employee of the Respondent.
DC confirmed that he had signed two contracts only and that thereafter the parties worked their arrangements in accordance with the terms of the prior contracts.
DC said that he felt that he and MG were part of the Respondent’s “team” in that they attended briefings, went to social events and used the staff canteen. In late 2012 the Respondent’s arrears situation was “out of control”. As a result three further individuals were appointed as Field Operators undertaking the same kind of work as the Claimants. DC said that the Claimants’ role was to support these individuals and train them and that it was not unusual to receive a call from one of them asking for advice.
DC said that when he experienced a delay in payment of his invoices for a short period he invoked the terms of the Consulting Agreement in support of his position.
DC said that following termination he sought employment through all of his business contacts but had been unsuccessful in securing any position although he was working voluntarily with a Credit Union. He confirmed that he has been in receipt of a private pension since 2000 but still actively seeks employment.
At the close of the Claimants’ case direction was sought by the Respondent representative that the Claimants had not discharged the onus of proof that they were employees of the Respondent. The direction was refused.
PD gave evidence on behalf of the Respondent stating that the Respondent had become concerned about mounting mortgage arrears and decided to consider a new approach. The Respondent decided to engage the Claimants on an independent contractor basis to provide a service similar to that provided to another large financial institution. The engaging of independent contractors to carry out a number of personal visits over a weekly period to customers was a unique departure for the Credit Control Division of the Respondent company. PD said that the Claimants were approached as the Respondent was aware of the type of work that the Claimants normally undertook on behalf of one of the larger financial institutions and were aware that they operated their own business providing consultancy services. PD said that at all times the Claimants were independent contractors who invoiced for their services and expenses.
CK gave evidence that he had joined the Respondent company in January 2006 following 25 years in the banking business with another large financial institution. CK said that the Claimants attended at the Respondent’s premises each Monday and received the files relating to the calls that the Respondent wanted made during the week. He said that the Claimants operated to their own timetable and that each Claimant was given a letter confirming that they were representatives of the company in order to affect an appropriate introduction to the customer.
CK said that the Claimants were not authorised to enter into any agreement on behalf of the Respondent. If the customer was agreeable the Claimants would help with the completion of a financial statement and subsequently make a report to the Arrears Support Unit and make a recommendation to that Unit. CK confirmed that the Claimants were included in staff briefings but said that the Claimants had no access to the Respondent’s internal systems and prepared their reports on two encrypted laptops in compliance with Data Protection Regulations.
In early 2012 all five Field Agents stopped making personal visits following the introduction of the new Central Bank Regulations. In January 2012 the Respondent was in a position to offer the Claimants work for only three days a week. The Claimants raised no objection. The three employees of the Respondent were redeployed elsewhere. On cross examination CK said that the Claimants were carrying out a function of the Arrears Support Unit of the Respondent company. He said that there were different regulatory requirements for independent contractors that were not required of employees. He said that in his view the Claimants were contracted to the Respondent company to undertake a certain activity administered by the Arrears Unit.
The Tribunal has given careful consideration to the evidence of all witnesses, the oral and written submissions of each party’s representatives and the case law relied upon by each party in support of their contentions.
The Claimants contend that they were employees of the Respondent and that in September 2013 they were unfairly dismissed from employment. The Respondent contends that at all times the Claimants were engaged as independent contractors providing services to the Respondent from January 2009 until October 2013.
Accordingly, the preliminary issue before the Tribunal is whether the Claimants undertook work for the Respondent under a Contract of Service or a Contract for Services.
In this case, each of the Claimants had been employees of large financial institutions from in and around the mid 1960’s until, in the case of MC, he set up business as a Financial Consultant in and around 1986 and in the case of DC, he accepted early retirement in and around 2000. By September 2008, when the Claimants were approached by the Respondent to undertake work on its behalf, both Claimants were operating a small business as Financial Consultants Trading As Valeview Financial Services numbering as clients various Solicitors firms and financial institutions by whom they were engaged as independent contractors.
The proposal of the Respondent was that the Claimants would undertake residential calls on customers who were in default of payment in the same manner as the Claimants had undertaken residential calls for one of the larger financial institutions. The Claimants were engaged on a trial basis in September 2008 and a formal Agreement was not entered into between the parties until 5th January 2009 and a further Agreement was signed by the parties on 8th April 2010. Thereafter no further formal Agreements were signed, although it appears from the evidence that all parties operated within the terms of the formal Agreement.
The “Consulting Agreement” above referred to describes the parties as “the Client” and “the Consultant” and contains, inter alia, a provision that “nothing in this Agreement shall be construed or have effect as constituting any relationship of employees and employer between the Client and the Consultant”. It is well established in the cases cited by both parties to support their contentions that a deciding body should give consideration to the terms of any written agreement but should not confine its considerations to those terms on the basis that although included in any Agreement they may not constitute contractual terms imposing contractual obligations on one party in favour of the other, but may merely be a statement which may or may not be determinative of the actual legal position between the parties.
Therefore whether or not the Claimants were retained under a Contract of Services or a Contract for Services depends on the totality of the contractual relationship between the parties, whether express or implied and whether or not the contractual relationship changed during the course of dealing between the parties.
In reaching its conclusions the Tribunal has had regard to the various non-definitive tests which the Courts have identified as being of assistance in determining the true nature of the working relationship between parties, together with all other relevant considerations, including mutuality of obligation and which arise from the particular facts and circumstances of this case.
The arrangement entered into between the Claimants and the Respondent was similar to that previously worked between the Claimants and (FA) for a period of approximately twelve years and the Claimants had been offering their services as independent contractors for some time and operated their own independent contracting business as financial consultants. As long term employees of large financial institutions and afterwards independent contractors to large and small clients, there can be no doubt but that the Claimants were aware that the Consulting Agreement constituted a Contract for Services. Indeed it was accepted by MG in evidence that the Claimants commenced work for the Respondent as independent contractors.
Although no evidence was given by either Claimant highlighting a time when either reached the conclusion that they were employees of the company rather than independent contractors and neither Claimant sought a re-negotiation of the Agreement to reflect their positions as employees of the Respondent during the course of their working relationship. However, in reaching its decision, the Tribunal has given consideration as to whether or not over the course of time the working relationship did in fact change from contractor to employee.
The Claimants were not on the company payroll but presented invoices for payment on a monthly basis. The Claimants were registered as self-employed and charged for and paid VAT apart from a period of de-registration between January 2012 and June 2013.
The Claimants were only paid for days on which they worked. They accepted, unlike employees of the Respondent that they did not receive holiday pay, sick pay and were not members of the employee pension scheme. They did not pay PRSI and were assessed and taxed as self-employed. Any expenses in respect of travel were reimbursed to the Claimants on foot of an invoice.
On the introduction of new Central Bank Regulations in early 2012 the work offered to the Claimants by the Respondent was reduced to three days a week for a short period. The Claimants were not redeployed to other sections of the company but confined to reviewing files only. Employees of the company were redeployed. No objection was raised by either Claimant to the three day week and the consequent reduction in income.
The Claimants had no access to the Respondent’s internal email system but used encrypted laptops for communicating with the Respondent. They had restricted access to the Respondent’s premises.
Whilst the Claimant’s attended weekly Monday morning meetings when the details of and the files relating to the weeks work were furnished, the Claimants retained autonomy on relation to the timing of each individual visit, the conduct of the meeting with the customer and their own itinerary. There was no restriction imposed by the Respondent on working hours provided the file load was dealt with.
The Claimants had interaction with other employees through meetings, training courses and social events. However the Claimants’ attendance at the Respondent’s premises was limited to one day a week to collect and discuss files but they did not hold an office desk or a telephone line. When it became necessary for the Respondent to implement the new Consumer Protection Code the Claimants did attend the training courses which were obligatory pursuant to the Regulations. In the view of the Tribunal these are matters not inconsistent with the Claimants’ status as independent contractors providing a specific service to the Respondent.
The issuing to the Claimants of a staff badge for identification purposes on entering non-public areas, the assignment of a staff invoice number and the presentation of a letter of introduction on the Respondent’s headed notepaper are matters of practicality rather than matters indicative of employment status.
The Tribunal has also considered the issue of mutuality of obligation where a work provider is obliged to provide employment and there is a corresponding obligation on the worker to accept and carry out the work provided. It is clear that between January 2012 and June 2012 mutuality of obligation did not exist in the working relationship between the Claimants and the Respondent. When the Claimants work was reduced to three days a week and, unlike employees of the Respondent who also undertook residential calls, the Claimants were not redeployed to other sections of the company but accepted the consequent reduction in income without protest that they were employees. Further, it is noteworthy that when in and around July 2013 a minor dispute arose in relation to payments to the Claimants, they expressly invoked the terms of the Consulting Agreement and in the course of so doing referred to payment of their fees as consultants.
The Tribunal has taken all relevant factors into consideration in reaching its conclusion that the true nature of the working relationship between the parties was that the Claimants were independent contractors and not employees of the Respondent. Accordingly, the claims under the Unfair Dismissals Acts, 1977 to 2007, fail.
Sealed with the Seal of the
Employment Appeals Tribunal